Australia | Jul 03 2007
By Greg Peel
Consensus is that the effect of last year’s interest rate hikes has now abated and the housing market is on the improve. Retail sales were similarly supposed to be strong. But May’s figures do not bear this out.
Dwelling approvals fell 5.6% following a revised fall of 3.4% in April and against consensus expectations of only a 1.7% decline. Although the figures are often fraught with volatility, the most disappointing result, according to the economists at Westpac, was a 3.2% fall in the larger, more stable private sector housing component. The sharpest pullback was again in New South Wales.
Westpac is unsure how to read the figures, suggesting they may just be “noise” in an otherwise positive trend. Commonwealth Bank suggests strong economic conditions should still support the housing market even if there is another rate rise, while TD Securities is happy to stick to its line that migration and the baby boom will ultimately see housing demand push higher.
Meanwhile, retail sales figures also surprised, falling 0.1% in May when economists were expecting a 0.7% rise. Again, economists are unconcerned, citing higher petrol prices and an unseasonably warm May which would have encouraged consumers to delay their winter clothing purchases. If the latter is correct, the number should leap in June as we’ve all been freezing our proverbials off. In the case of petrol, well, nothing seems too rosy on that front at present.
Strange days indeed.
